How 4 European Low-Cost Carriers Are Preparing for Their Own Brexit

Despite all the sabre-rattling, it could be business as usual for Europe’s low cost carriers even if the United Kingdom leaves the EU.

— Brian Sumers

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Many of Europe’s budget airlines are making worst-case scenario plans that would allow them to continue flying the same routes as today even if the United Kingdom shakes up the continent’s air travel market by making a clean split from the European community.

The issue is important, as low-cost airlines generally have more exposure to potential Brexit fallout than flag carriers, such as Lufthansa, KLM, and British Airways. While large, global network airlines rarely operate intra-European routes that do not touch their home countries, Europe’s low-cost airlines often fly between cities far from their home nations.

Those routes are now at risk.

London-based EasyJet, for example, flies to roughly 20 cities from Paris Orly Airport, while Dublin-based Ryanair flies some routes entirely within the UK. Both carriers want to continue business as usual regardless of how the UK’s policymakers proceed, and they’re making contingency plans to do so.

It is possible their efforts will not be required, as the consequences of the UK’s decision to leave the European Union, assuming the country follows through, may not be as dire for aviation as for other industries. Historically, some non-EU members have had the right to opt into many of the EU’s aviation agreements, which is why Norway’s airlines can fly as much as they want within Europe and to the United States. Norway is a party to many of Europe’s most vital aviation agreements.

If the UK joined the European Common Aviation Area, Europe’s low-cost airline ecosystem likely could continue unchanged. But there’s no guarantee the UK will seek membership, and it is not certain it would win acceptance. One potential problem is that the UK would have to agree to follow Europe’s aviation policies if it wants access to the market. And many voters supported the UK’s leaving the EU precisely because they chafed at European regulation.

Another option likely would change how airlines operate. According to IATA, an international airline trade group, the UK could pursue a comprehensive aviation agreement with the EU, which would give the UK’s airlines access to European airports. This approach would help free the UK from European regulators, but it may not allow airlines as much free access as today’s model.

As it is not yet clear how the UK and EU will handle future aviation agreements, some of Europe’s most powerful discount airlines are already making other plans. Here’s how four have reacted:

EasyJet

EasyJet, the UK’s largest low-cost airline and second-biggest in Europe, has said it will lobby regulators to ensure UK carriers continue to have access to a “fully liberal and deregulated aviation market European air transport market.” If that occurs, EasyJet said it does not expect to have to alter its model.

However, EasyJet is making contingency plans. On July 1, the carrier said it is seriously considering creating a second operation in an EU member state. If EasyJet obtained an air operator’s certificate in Ireland, France, Germany, or any EU country, it could continue flying intra-European routes, even if the UK makes a clean break with the continent.

However, even if EasyJet added a second certificate, the company said it would remain based near London Luton Airport

Norwegian

Perhaps more than its competitors, Norwegian is most prepared for disaster in the UK.

Norwegian has already diversified operations considerably, obtaining operating certificates in the UK and in Ireland, as well as in Norway. Given that it has three certificates in three countries, Norwegian would have little trouble moving assets in the event of regulatory changes.

Still, a Norwegian spokesman said it is too early to consider a worst-case scenario.

“We will await details of how the UK will transition out of the EU and how this will affect air travel,” Norwegian’s Anders Lindstrom said in an email. “Nonetheless, the UK remains one of our most important markets and our ambitious plans for continued UK growth remain unchanged.”

Ryanair

Europe’s largest low-cost airline has already said it will pivot away from the UK. In a statement, the Irish carrier said it is “unlikely” that it will base any more aircraft in the UK starting in 2017, instead planning to grow in the EU. For now, though, Ryanair said its UK flights will continue as normal.

The airline is considering other plans. If the UK leaves the single European market, a Ryanair spokesman said the carrier might obtain a UK operating certificate. This would allow it to continue flying routes like Glasgow to London.

Vueling

“Vueling is a Spanish airline, has a Spanish Air Operator’s Certificate (AOC) and Spain remains part of the EU,” a spokeswoman for IAG said in an email.

As for the parent company, IAG, which also owns Spain’s Iberia and Ireland’s Aer Lingus, the UK’s proposal to leave is not expected to “have a long term material impact on its business,” the IAG spokeswoman said.

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